Wednesday, September 2, 2015

Clarifications on Education Loan Interest Subsidy Scheme (CSIS)

ELTF has been getting lot of enquirers from different part of country seeking clarifications on 'Interest Subsidy Scheme'.  

There are two types of Interest Subsidy scheme for students pursuing education in India.  

1. First Scheme:  For Loans granted / disbursed on or after 1st April 2009; 
2. Second Scheme:  For Loans granted / disbursed prior to 1st April 2009;

For both the Schemes, the eligibility is as follows: 

a)   The Education Loan should have been sanctioned under IBA Scheme;
b)  The Loan should have been granted to pursue professional or technical courses in approved Institutions;
c)    The education should be within India;
d)   The gross parental income should be less than 4.50 lakhs.

For Loans granted prior to 1.4.2009

In Feb 2014, Shri P Chidambaram (then Finance Minister)  announced in the Parliament that Government would reimburse 100% of the interest outstanding as on 31.12.2013.  Canara Bank was appointed as Nodal Bank to pool the data.  Interest component on all eligible  loans outstanding as on 31.12.2013 were paid by the Government to the Banks and credited to the loan accounts.

In this scheme, the students who availed loan prior to 1.4.2009 and who paid the interest regularly, were in a disadvantageous position.  Since interest component was either nil or negligible, they did not get any benefit of the interest subsidy.  Similarly the students who closed the education loan account before 31.12.2013 were also not eligible to get interest subsidy.

Now this scheme is closed.  Now the students cannot claim any interest subsidy under this scheme.  We are writing this only for information.

For Loans granted / disbursed on or after 1.4.2009

Government of India (Ministry of HRD) provides 100% interest subsidy for the eligible students (as given earlier) for all the loans disbursed on or after 1.4.2009 during the moratorium period.  

If a loan has been sanctioned in 2007 for Rs.4 lakhs, to be disbursed @ Rs. 1 lakh every year,  the student is eligible for interest subsidy for the disbursements made in 2009 (if it is after 1.4.2009) and 2010.

Moratorium period is the study period + one year of six months after getting employment whichever is earlier. 

Interest subsidy is available for either Under Graduation or Post Graduation.  From the same family, brothers and sisters can avail the subsidy individually.  

Students can avail the subsidy under only one scheme.  Students who availed subsidy under the second scheme (loans prior to 1.4.2009) are not eligible for subsidy under the first scheme. 

Please go through the guidelines in this links very carefully.

Problems faced by students

The students were required to submit the Income Certificate to the Bank to claim interest subsidy.  Since the Banks did not intimate many of the students in the early years, many eligible students did not get interest subsidy.

It is the duty of the Banks to identify the eligible students and advise them to get the income certificate.  Also, it is the duty of the Bank to submit the claim through the Nodal Bank portal to the Government of India within the time stipulated by the Government.  Due to the fault of many of the Branches, claims were not submitted in the past claiming interest subsidy by the Banks.

Even the students who got subsidy, received only a small portion of the interest debited by the Bank.  In many cases, Banks failed to submit the claim for few years.  For example, banks might not have claimed for 2009-10, but claimed for other years.  Also, they might have claimed for 2009-10, 2010-11, but might not have claimed for other eligible years during the moratorium period.

ELTF has been taking up this issue through supporting MPs in the Parliament and with the Government for the past three years.  

The eligible students can check the status of their interest subsidy through this link
Government of India opens the portal as one time measure

In order to resolve the confusion of the past disbursement of Interest Subsidy, the Government of India (MHRD) has now permitted  the Nodal Bank Canara Bank to open their portal to enable the Banks to file the claim.  

Accordingly, all the pending claims, unclaimed interest subsidy for the period from 2009-10 to 2013-14 can now be claimed by the Banks.  Though the portal was supposed to have been opened on 1st Sep 2015, due to some technical reasons, it is likely to be opened next week.  Please keep watching this site and our Facebook page for latest updates.
What students can do

If you have any education loan disbursement on or after 1.4.2009  (irrespective of your date of sanction say 2008 or 2007) and if you are eligible for interest subsidy as given in the early paras, then check your statement of account and also through the link given above for the subsidy claimed by the Bank.

Please compare the actual interest debited by the Bank during that Financial Year with the interest credited or not credited.  If the students find that either interest subsidy for that year has not been claimed or shortly credited, please write a letter giving the complete details and hand over to the Manager.  Please request the Manager to claim the interest subsidy, when the portal opens.  

If the students get a response from the Managers that they have not received any instructions from the Head Office, the students can send their request to the Chairman of the Bank, Regional Manaer and to the Branch under Registered Post. You can also mention that the Manager refused to accept the request.   You can request the Managers to claim the interest as and when the portal gets opened, after verifying the correctness.  

If required, the students can meet the Regional Manager and submit a letter personally.  Though it is the duty of the Bank Manager to identify and submit the claim, to avoid any future confusion, ELTF suggests that students themselves can verify and draw the attention of the Managers.

For the latest IBA guideline, please click

ELTF will not follow up individual cases.  If the students find any difficulty, they have to send complaint to Chairman of the Bank and to Reserve Bank of India.  Please do not write to ELTF for individual issues.  They can personally meet the Regional Managers and sort out the issues. 

This is an one time measure allowed by the Government.  Hence, students and banks should avail the opportunity so that all the pending cases are resolved.  
By K Srinivasan, Convenor, ELTF

Thursday, August 27, 2015

All pending interest subsidy claims can be submitted immediately as one time measure

Under instructions from MHRD, Indian Banks' Association has notified that all pending interest subsidy claims (1.4.2009 to 31.3.2014) belonging to SC/ST and General category can be submitted immediately by the bank branches to the nodal bank.  
The eligible students, who did not get the interest subsidy earlier may immediately meet the Manager and submit a letter of request to the Bank.  They can also give the copy of the notification to the branches.  If the Branch Managers do not respond positively, the students can report to the Chairman of the Bank and also to Reserve Bank of India.

Canara Bank will open the portal on 1st Sep 2015 and close on 15th Sep 2015.  The eligible students may meet the Bank Manager and give a letter requesting him to submit the pending claims within the due date.

The copy of the notification:


26th  August, 2015
The Chief Executives of Member Banks

Dear Sir/Madam,

Opening of CSIS portal for claiming CSIS subsidy for
OLD CASES-final chance

The Ministry of HRD vide their communication dated 20th August, 2015 has advised to keep the web portal open and sensitize all the banks that, this is the last opportunity for banks to lodge the claims and ensure that the eligible students who have availed education loans  are not deprived of the benefit of interest reliefThe Ministry of HRD has requested IBA to advise members banks that portal will be opened for lodging all old pending claims in respect of ALL THE ELIGIBLE unclaimed cases [including SC/ST and General Category] for the period from the year 01.04.2009 to 31.03.2014 as a onetime measure.  This will be the final chance.

Accordingly, the Nodal bank viz. Canara Bank has informed us that they are in process of opening the CSIS Web Portal for submission of the old pending / left over cases and will be informing the date of the opening of portal very soon. 
In the meantimewe request all the members to please keep the required details ready for submission of the eligible claims.  KINDLY NOTE THAT THIS WILL BE THE FINAL ONETIME MEASURE AND THERE WILL BE NO MORE OPPORTUNITY TO CLAIM THE CSIS SUBSIDY for the old claims for the period from the year 01.04.2009 to 31.03.2014.

Please note that the CSIS Scheme is also applicable to RRBs, we request all sponsoring Public Sector Banks to inform their respective RRBs to take necessary action in the matter.

Please be guided accordingly with immediate effect.
Yours faithfully,

K Unnikrishnan
Dy. Chief Executive

Friday, August 7, 2015

Interest subsidy claims for 2014-15 to be submitted before 25th September 2015

All Bank Branches should submit the interest subsidy claims for 2014-15 before 25th September 2015.  Though it is the duty of all the branch managers to submit the claim to the nodal bank Canara Bank before the due date, in the past, due to various reasons, managers have not submitted the claims properly. This has resulted in many eligible poor students not getting the interest subsidy from the Government.

Students who have availed education loans under IBA Scheme pursuing professional or technical courses in the approved institutions and whose annual parental income is less than Rs.4.50 lakhs are eligible for 100% interest subsidy during the moratorium period.  They should have submitted the income certificate duly signed by Thasilldar. 

Eligible students may meet the branch managers and get the confirmation that the Branch has included their name and the exact amount (100% of interest charged during 2014-15).  The students can also submit a letter to the Managers seeking confirmation for having submitted the claim.  They can endorse a copy to the concerned Regional Managers and the Branch Managers.  We are suggesting this as an abundant caution.

If the Branch Managers refuse to give proper information, the students can write a complaint to the Chairman of the Bank and to the Regional Manager.

AADHAR Card not mandatory for processing of Education Loans

We are receiving complaints that some of the banks are not processing / sanctioning the Education loan applications if the applicants do not submit the AADHAR card.  When we sought clarification from the Nodal Bank Canara Bank, Shri Badrinath, AGM, Canara Bank Head Office has responded to us the following quoting IBA guidelines.  From these guidelines, it is clear that Aadhar cards are not mandatory for processing the education loan applications.


IBA Mumbai during the revision of Education loan scheme guidelines had advised banks to Obtain UID number issued by  UIDAI ( Aadhaar ) to the students and note the same in the System.

Accordingly we had  issued guidelines to the branches to prevail upon the students to submit the PAN/AADHAAR card particulars before completion of the course.

Wherever a student is not having UID number, branches are advised to obtain undertaking letter from the student for submission at a later specified date. However, the disbursement in subsequent years should not be stopped for the said reason. The same should be followed up till submission for noting in records. 

From the above , it is clear that obtention of AADHAAR card is neither mandatory nor a condition for sanction of loan.


Mr Unnikrishnan, Deputy Chief Executive of Indian Banks' Association has further clarified as follows:

Aadhar is not mandatory for sanction of Education loan, but students are advised to submit Aadhar before completion of course.

Wednesday, June 3, 2015

Dharmapuri MP Dr Anbumani shows the way - Organises Education Loan Awareness programme for bankers and students

Education Loan Awareness Programme at Dharmapuri on 1st June 2015
Dr Anbumani Ramadoss MP (third from left), Prime Point Srinivasan (fourth from left)
Dr Anbumani Ramadoss (Former Union Health Minister and sitting MP of Dharmapuri, Tamil Nadu) organised an unique event on 1st June 2015 at Dharmapuri to create awareness about education loan among the students and parents. He had also invited all the local Bank Managers. 

Probably this is the first time, a sitting MP is organising such awareness programme anywhere in India for the benefit of people in his constituency. They made a wide publicity through media, banners and pamphlets.  More than 300 students and parents participated in this event.

Prime Point Srinivasan, Convenor of Education Loan Task Force (ELTF) was the Chief Guest and he delivered a talk on various aspects of Education Loan guidelines.  This event helped to ease the tension between the bankers and the public and to understand each others difficulties.   

Two important things observed was that though Reserve Bank of India and Indian Bank Head Office specifically advised all the banks not to follow 'service area concept' for education loans, Lead District Manager of Indian Bank openly admitted in the meeting that they were following service area concept for their convenience.  However, ELTF has taken up the issue with Indian Bank Head Office.

Secondly, the local State Bank of India has not been granting any education loans presently citing bad debts.  This matter is also being taken up by ELTF with State Bank of India Chairman.

While addressing the gathering, Srinivasan explained the application procedures, eligibility of interest subsidy, grievance redressal mechanism, etc.  
While summing up the views, Dr Anbumani MP said that this programme was more a sensitization programme for both bankers and the students.  He also assuired to take up with Finance Minister the mess up of interest subsidy matter.

This event was an unique event which can be emulated by other MPs and MLAs in their constituencies.  Another important matter which needs 'three cheers' is the total neutrality of the programme.  Though Dr Anbumani is the leader of a big political party, his team ensured that no political colour was given to the event.  

Some of the photos:

Tuesday, April 7, 2015

Indian Overseas Bank confirms that Govt. of India settled only 44% of the interest subsidy claim for Education Loan in 2013-14

Time and again, Education Loan Task Force (ELTF) has been blaming the Government of India for not settling 100% of the eligible interest subsidy during the moratorium period.  ELTF has taken up this issue through our supporting MPs in the Parliament.

Now in response to a letter of Shri Vinoth Kumar, a student borrower of Indian Overseas Bank, B. Mettur Branch, the Bank's Head Office has confirmed that only 44% of the claim was settled by the Government for the year 2013-14.  

As per rules, the Government of India should settle 100% of the interest during the moratorium period.  In many cases, the students get only a small portion.  The banks force the students to pay the balance interest and treat them as NPA.  

The eligible students can now individually approach their branch manager and request them in writing (1) the amount of interest debited in the loan account during the moratorium period and (2) the amount of interest subsidy credited to the loan account. Alternatively, you can collect the statement from the Bank and work out the details yourself. If the students need any clarification, they can approaqch the bank manager.  If the Managers do not clarify, the students can meet the Regional Manager and give a written complaint.  

Students should note that there are two interest subsidy schemes. (1) for loans granted on or after 1st April 2009 - it is a continuous scheme. Due date for submission of claims by banks is over for the period up to 2013-14.   (2) For the loans granted prior to 1.4.2009 and outstanding as on 31.12.2013.  This is one time scheme and now the due date is over for submission of claim.  For more details, please see the guidelines in this site. 

 If there is a difference, the students can also ask the Bank Manager the details of the claim submitted by them on behalf of the concerned loan account.  If there is any discrepancy in the interest subsidy received or claimed, the students can send a written complaint to the Chairman of the Bank.

Please do not post any comment for this posting.  If you need to convey anything, please send a us your mail to

Tuesday, March 24, 2015

7 reasons why NPAs are mounting in education loan - Insensitivity of banks pushes the students into debt trap

Based on the complaints received from various students, ELTF finds that the banks do not classify NPA properly and unnecessarily blame the students. We have found out 7 important  reasons for inflated NPA by banks. 

1.  Inhuman attitude of the bank officials.  Not understanding the financial status or earning capacity of the student.  Though IBA stipulates 10 to 15 years of flexible and telescopic repayment (lower EMI at the beginning and gradual increase of EMI in the later years), most of the branch managers fix huge EMI for 5 years.  This burdens the students.  EMI is fixed more than the income of the student. 

2.  Reluctance of bank managers and regional managers to re schedule the EMI, even in genuine cases.

3.  Wrong classification of education loans.  If the education loans are properly classified, nearly 75% of the present NPA will become good assets.  Banks purposely show increased NPA to avoid education loans.  They prefer huge corporate loans, even if they become NPA,  for 'obvious' reasons.  

4.  Right from the day 1 of a student entering the bank premises seeking education loan, he is being harassed and asked to run pillar to post.  The students get frustrated and develop enmity with the bank.  Managers do not create awareness of the bank rules among the students.  In many cases, we found managers themselves do not have good knowledge. 

5.  Lack of good relationship between the branch officials and the borrowing students.  That is why we always suggest that a get together of all the borrowing students once in a year to be conducted by the branches or regions, so that the students develop loyalty.  Unfortunately, no bank is willing to accept our suggestion.

6.  Lack of proper interest subsidy management by the branches.  Though 100% subsidy is available for students, the branches do not claim the correct subsidy in time.  Even the subsidy element is taken into account as NPA.   Unpaid subsidy is the default of the Government. For example, a person who avails a loan of Rs.1,00,000/- at an interest rate of 12% pa, disbursable for 4 years @ Rs.25,000/- per annum is eligible for an interest subsidy of Rs.42,000/- from the Government, if he is eligible.  Unfortunately, in most of the cases, the student gets only around 20%.  If he gets a subsidy of Rs.10,000/-, the bank forces the student to pay the balance amount of interest Rs.32,000/- (amount not paid by the Government).  When the student commits 3 months default, the bank classifies the entire loan as NPA, which includes the sum of Rs.32,000/- not paid by the Government.  It is the NPA of the Government technically and not that of the student.   How the student can be blamed?

7.  Individual banks and Indian Banks Association do not take interest in creating awareness about education loan, interest subsidy, repayment etc.  Even recently, when Ministry of HRD extended the interest subsidy due date for SC/ST students, neither the banks or IBA took any initiative to pubclicise the extension date.  ELTF issued press note and publicised throughout India for the benefit of SC/ST students.  The insensitivity of the Banks and the Indian Banks Association in implementing the Education Loan Scheme is the main reason for all the problems faced by the students.

-  By K. Srinivasan, Convenor, Education Loan Task Force

Friday, December 19, 2014

Independent expert committee to investigate education loan and interest subsidy scheme demanded in Lok Sabha

At the request of ELTF, Shri S R Vijayakumar, MP of Chennai Central took up the Education loan interest subsidy issue during 'Zero hour' in the Lok Sabha on 18th Dec 2014.  He demanded an independent expert committee to be set up to investigate into the administration of education loan and interest subsidy scheme.

The text of his speech as published in the Lok Sabha site:

SHRI S.R. VIJAYA KUMAR (CHENNAI CENTRAL): Hon. Deputy-Speaker, Sir, I would like to bring to the notice of the august House an important matter. An independent expert Committee should be formed to investigate the administration
of educational loan interest subsidy. In response to my submission in the Lok Sabha on 30th July, 2014 under Rule 377, the hon. Finance Minister has written that the banks have been advised not to insist on payment of interest when the students are eligible for interest subsidy on educational loan. He has also mentioned that the banks have been asked to follow the guidelines. But in reality
we get a lot of complaints that the banks are forcing students to pay interest when they are eligible for interest subsidy. The poor students are forced to borrow money from all sources to repay the bank interest. The banks are creating only a small portion as eligible interest subsidy to the students. This defeats the very
purpose of the scheme to provide educational loan to poor students with comparable repayment. We get reports that the SBI classifies the educational loans as NPA even within four to five months after the moratorium and refer to Lok Adalat. This is causing mental agony to young students. There seems to be a lot of mess in administering interest subsidy on educational loans. I would like to
request the hon. Finance Minister to investigate the matter by forming a committee of independent expert 

Monday, December 15, 2014

Finance Minister's response on 'Interest subsidy' - ELTF demands constitution of an independent investigation committee

As requested by ELTF, Chennai Central MP Shri S R Vijayakumar took up the issue of poor management of 'interest subsidy scheme' by the banks in the Lok Sabha under Rule No 377 on 30th July 2014.  link.  In response to the submission in Lok Sabha, Hon'ble Finance Minister Shri Arun Jaitley has sent his personal response to Shri S R Vijayakumar MP on 1st Dec 2014.  In this letter, Finance Minister mentions the following important points.

1.  All Banks have been asked to display in their branch premises prominently, a toll free number for giving complaints.

2.  All Banks have been advised to follow the instructions given by the Government/RBI and IBA for considering and granting of education loans.

3.  All banks have been advised not to insist the student borrowers to pay interest during the moratorium period, if they are eligible for interest subsidy.

4.  Interest subsidy scheme has been duly publicised through print and TV media widely.

5.  If there is a delay in reimbursement of subsidy, the students are given retrospectively by the banks. 

Probably, ELTF feels that Hon'ble Finance Minister might have just reproduced the comment given by IBA or any other authorities, as if the entire system is working well.  In reality, the banks are not displaying any toll free number prominently to enable the public to communicate the grievances.  Banks do not follow the guidelines issued by IBA in respect of Education Loans.  Many of the Private Banks have scant respect for IBA guidelines.

Though, the banks have been instructed not to insist on the payment of interest, if they are eligible for interest subsidy, during moratorium period. In reality, all the banks force the banks to pay interest during the moratorium period. Instead of calculating at simple rate, all the banks calculate interest on compounded basis. Though the students are eligible for 100% interest subsidy, they are given only a small portion of the subsidy. 

Though the banks are required to communicate the interest subsidy scheme individually to all the student borrowers, they do not inform the students.  No publicity campaign has been done by IBA or by any banks.  Probably IBA has misled the Government with wrong information.

From the feedback received by ELTF, we are of the opinion that the Finance Minister has not been given the right picture of the management of the scheme.  Though the students are promised 100% subsidy during the moratorium period, they are given only a small portion.  

Though one year holiday period is given after the study, many students do not get proper employment.  Banks like State Bank of India after  3 or 4 months of moratorium period, treat the loans as NPA and handover to Lok Adalat and force students to sign documents to pay the entire loan within six months.  While IBA guidelines permit flexible repayment schedule upto 10 to 15 years, the many banks, including State Bank of India, pressurise the students to pay money beyond their capacity, thereby defeating the very purpose of the scheme. This affects their credit rating through CIBIL.

Recently, ELTF came across a case where a Branch in Chennai Zone of Corporation Bank did not submit the claim for interest subsidy, within the due date, since the officer was on leave.  The insensitivity of the Branch Manager and the Zonal Manager has denied interest subsidy to an eligible borrower. This has also been brought to the knowledge of Finance Minister. 

ELTF is once again taking up the matter with Hon'ble Finance Minister through Shri S R Vijayakumar.

ELTF appeals to the Government to constitute a committee of independent experts to look into the management of education loan and interest subsidy scheme. 

Friday, November 14, 2014

One more opportunity for SC/ST students to claim interest subsidy before 31st Dec 2014

Indian Banks Association has now issued a circular advising all the banks to submit any left out interest subsidy claims relating to eligible SC/ST students who have availed education loan from the banks.  Since the funds allotted to SC/ST students are not fully utilised, they are now advising all the banks to submit the claims from 1.4.2009 onwards till the financial year 2013-14.  This is not applicable for 'General category' students. 

The claims have to be submitted by the respective banks before 31st December 2014 to nodal bank Canara Bank.  If there are any eligible SC/ST students who have not claimed interest subsidy in the previous years may now avail this opportunity.  ELTF requests such eligible students to meet their Branch Manager with a copy of this IBA guideline and complete the formalities.

If the Branch Managers refuse to cooperate or show ignorance of this notification, the eligible students may meet the concerned Regional Manager and submit a written complaint to him.  They can also submit a written complaint to the Chairman of the Bank.  The last date for submission of claim by the banks is 31st December 2014.  

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